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Microchip Technology (MCHP) Gains As Market Dips: What You Should Know

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In the latest trading session, Microchip Technology (MCHP - Free Report) closed at $77.86, marking a +0.4% move from the previous day. This change outpaced the S&P 500's 0.16% loss on the day. Meanwhile, the Dow lost 0.12%, and the Nasdaq, a tech-heavy index, lost 3.64%.

Prior to today's trading, shares of the chipmaker had lost 3.81% over the past month. This has lagged the Computer and Technology sector's gain of 6.7% and the S&P 500's gain of 0.07% in that time.

Wall Street will be looking for positivity from Microchip Technology as it approaches its next earnings report date. The company is expected to report EPS of $1.62, up 20% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $2.22 billion, up 20.42% from the prior-year quarter.

MCHP's full-year Zacks Consensus Estimates are calling for earnings of $6 per share and revenue of $8.43 billion. These results would represent year-over-year changes of +30.15% and +23.54%, respectively.

It is also important to note the recent changes to analyst estimates for Microchip Technology. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.21% higher. Microchip Technology is currently a Zacks Rank #2 (Buy).

In terms of valuation, Microchip Technology is currently trading at a Forward P/E ratio of 12.92. This represents a discount compared to its industry's average Forward P/E of 17.13.

Also, we should mention that MCHP has a PEG ratio of 0.77. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Semiconductor - Analog and Mixed industry currently had an average PEG ratio of 1.42 as of yesterday's close.

The Semiconductor - Analog and Mixed industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 86, putting it in the top 35% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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